Thai DEC flexes muscles to defragment band 3

21 Jul 2015

I must apologize for my column yesterday. I got my interpretation of the messages from the regulator and from Dtac slightly wrong. Both were right, but in addition to Dtac (returning the spectrum) and the NBTC (auctioning the spectrum), there is the soon-to-be-all-powerful Digital Economy Commission that shuffled things around a bit.

Allan Rasmussen from Yozzo, a telecom consultancy, kindly pointed me to a Digital Economy Commission report that accepted Dtac’s offer to return 4.8 MHz and shuffle Dtac up to defragment the spectrum as well.

This was not the offer that Dtac made, but it was accepted. Dtac offered 4.8 MHz from its top block, adjacent to the DPC (AIS) spectrum, that much I got from the horse’s mouth and I stand by it. But instead of accepting Dtac’s offer as it was, they decided to also move Dtac up and take Dtac’s lower block spectrum instead before passing the re-jigged plan to the NBTC to go and auction off.

It is like offering your attic for rent, only for the council to come in and say we’ve got someone, then tell you to move out stuff out from the ground floor and into the attic while they settle in on the ground floor. Oh, well, this is Thailand.

So from low to high we now have 15 MHz (for auction), 15 MHz (for auction), 25 MHz (Dtac in use), 20 MHz (Dtac/CAT). Which, actually, is quite a good spectrum map, even if it did come about in an odd way.

So, after insulting Dtac for being insincere in its offer to return spectrum and move and rejecting the offer outright, the government quietly took up Dtac’s offer anyway and ordered them to move? Only they ordered them to move up, not down. What changed?

Dtac had asked for it to be able to use its remaining spectrum for 4G until the concession ends in 2018, but that was obviously not good for anyone. Better to leave it under-used for the next three years rather than actually, gasp, putting it to good use.

Rasmussen explained the key difference between the rejected scenario Dtac had offered and the one Digital Economy Commission came up with was that in the rejected scenario, Dtac offered to return 10 MHz. That would yield 3x10 MHz licences, essentially one each for the three incumbent telcos.

“The part where Dtac failed was that they [assumed a] 3x10 MHz auction while at the same time indicating one for Dtac, one for AIS and one for True, just like the 3G auction. However, the 4G auction has potential for a new 4th player and thus the spectrum cap came into play,” he reasoned.

But of course, everyone knows that markets naturally gravitate to three operators and one struggling not to go bust. Or is that not the case for Thailand?

Rasmussen argues here that there is a big opportunity as all the Thai telcos were going after the same market - the mass market. This leaves an opportunity for a targeted niche player. Of course that would not be easy and any new entrant would easily have to spend 2-3 times the licence cost on rolling out a new network. Whether that niche would be met with a 4th player or a carefully crafted MVNO remains to be seen.

What niche? Ethnic, elderly, M2M/IoT, retailers, OTT, tourists, youth, rural, quad-play and security are all possible and not targeted by the mainstream players today.

The show goes on.

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